When does Camp Margaritaville recognize revenue from ongoing royalty fees?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensing restaurant royalties are received from the operators of restaurants and bars located in the United States, Canada, the Caribbean, Mexico, and Central America. These royalties are calculated based on gross sales and are recognized in the period earned.
Resort Royalties
Licensing resort royalties are received from the operators of resorts located in the United States, Mexico, the Caribbean, and Central America. These royalties are calculated based on gross sales or as a fixed annual amount. Royalties are recognized in the period earned. Minimum payments of licensing fees collected in advance of the earnings process being complete are recorded as deferred revenue.
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, royalty fees from restaurant and resort operations are recognized in the period they are earned. Specifically, restaurant royalties are derived from restaurants and bars across various regions and are calculated on gross sales. Similarly, resort royalties, collected from resorts in multiple countries, are based on gross sales or a fixed annual amount.
This means that Camp Margaritaville recognizes revenue from these ongoing royalties as the sales occur at the restaurants and resorts. For a franchisee, this indicates that the royalty payments they make to the franchisor are tied directly to their sales performance during each period.
The FDD also notes that minimum payments of licensing fees collected in advance are recorded as deferred revenue until the earnings process is complete. This implies that if a franchisee pays a royalty fee upfront before generating the sales, Camp Margaritaville will not recognize that payment as revenue until the franchisee has actually earned it through sales.